Executives from both companies attend second shareholder briefing, expand Q&A time; firms highlight capital adequacy, merger synergies and shareholder return benefits; minority shareholders push back on exchange ratio and appraisal price

The headquarters of Tongyang Life Insurance in Jongno-gu, Seoul. [Provided by Tongyang Life Insurance]
The headquarters of Tongyang Life Insurance in Jongno-gu, Seoul. [Provided by Tongyang Life Insurance]

Woori Financial and Tongyang Life Insurance met directly with Tongyang Life's minority shareholders Monday to reiterate the rationale and expected benefits of a comprehensive share exchange that would make Tongyang Life a wholly owned subsidiary. Executives from both companies attended side by side, conducting presentations and a question-and-answer session that ran for more than an hour, signaling their intent to give weight to minority shareholder input.

The second shareholder briefing was held that afternoon at Gran Seoul in Jongno-gu, Seoul. It drew senior officials from Woori Financial's management strategy, business development and investor relations divisions, as well as executives overseeing finance, management innovation, accounting and compliance at Tongyang Life. The companies said the session was intended "not as a formality but as an honest forum to address what shareholders care about most," cutting back on prepared remarks compared with the first briefing and significantly expanding time for questions.

The briefing came amid a Financial Supervisory Service request for amendments to the securities registration statement and growing resistance from some minority shareholders over the exchange ratio. The transaction is also drawing particular scrutiny as the first large-scale comprehensive share exchange to proceed since the revised Commercial Act — which codifies directors' duty of loyalty to shareholders — took effect, with the market closely watching how the companies handle their obligations to protect and inform ordinary shareholders.

The companies again defended the fairness of the exchange ratio. The ratio — 0.2521056 Tongyang Life shares per one Woori Financial share — was calculated using the benchmark price method under the Capital Markets Act. The companies said they had already obtained a review from Samil PricewaterhouseCoopers and, in response to shareholder feedback, additionally engaged Anjin Deloitte. Choi Gyeong-nyeong, Tongyang Life's chief strategy officer and head of management innovation, said the final exchange ratio "falls within the appropriate range indicated by both accounting firms" and that the verification results would be reported to the special committee and the board and reflected in the amended registration statement.

The companies also highlighted procedural fairness. Each established a special committee to review the legitimacy of the transaction and the fairness of its terms. Woori Financial's committee comprised seven independent outside directors, while Tongyang Life's included all three outside directors and one external expert. Both committees received legal advice from Kim & Chang and Bae, Kim & Lee, and accounting guidance from Samil and Anjin. Choi said the companies "recognized the structural potential for conflicts of interest between the controlling shareholder and ordinary shareholders and reviewed the fairness of the entire transaction process."

The benefits of full subsidiary conversion were also laid out. Yang Gi-hyeon, head of Woori Financial's business development division, cited the need to build capital ahead of next year's basic capital regulatory ratio requirements, faster group-level decision-making, and the elimination of overlapping costs through a merger with ABL Life Insurance. He said "converting to a wholly owned subsidiary is more advantageous for both Tongyang Life and the group than maintaining the current structure." Woori Financial also stressed shareholder return benefits. Lee Yeong-gyu, deputy head of Woori Financial's IR division, pointed to quarterly dividends, a commitment to expand dividends by more than 10 percent annually, tax-exempt dividends, and a 200 billion won ($145 million) share buyback and cancellation program in the first half of the year, adding that "once the exchange is complete, Tongyang Life shareholders will also be able to benefit from the group's shareholder return policy."

Minority shareholders voiced frustration on the floor. Presentations were interrupted multiple times as shareholders called out, "Stop explaining things we already know and listen to us." One shareholder raised the roughly 17 percent gap between the 10,562 won per share Woori Financial paid to acquire the controlling stake and the 8,720 won exchange price offered to minority shareholders, saying, "It may be legal, but it is not fair." Shareholders also took issue with the appraisal rights price of 8,505 won — lower than the exchange price — and the timing of a share cancellation that occurred shortly after the exchange ratio was set.

On this, Yang said "two years have passed since the acquisition of the controlling stake, and in the meantime stricter insurance accounting and supervisory regimes have weighed on the company's value," arguing a direct comparison was not straightforward. He reiterated that the exchange ratio and appraisal price were determined by formulas prescribed under the Capital Markets Act and could not be adjusted at the company's discretion, and that the timing of the transaction was not deliberate.

Woori Financial and Tongyang Life said they plan to incorporate feedback gathered Monday into an amended registration statement. The schedule calls for an extraordinary general meeting on July 24, the share exchange on Aug. 11, and delisting at the end of August.


psj@heraldcorp.com